KH2 is quite a bit heavier than the first one and that CPU is pretty slow I'm afraid
So am I basically screwed on speed up?
Well you're already using speedhacks and I suspect overclocking your CPU is out of the question as I believe that's a laptop? So I would expect that would be the case. You're probably better off either using a desktop PC with a better processor or playing it on your PS2 for now.
ok thanks for the help guys, I hope to discuss issues again sometime
You can adjust the base frame rate in pcsx2 emulation settings to 50% to keep the speed constantly below 50%. Still this would result in only half the speed for the whole game.. not only rendering (as you currently see during slowdowns) and might not be the best gaming experience.